When high-cost financing is being issued for the purchase of living things, something needs to be done, according to advocates across the country.

To circumvent state law in New Jersey and elsewhere, groups say, a lender is using a bank based in Utah in order to make "predatory" loans to people looking to purchase puppies in-store.

The Garden State has a standard consumer loan rate cap of 30%, but through the route taken by lender EasyPay Finance, the pet loans can be issued with APR rates of 130% to 189%, according to a campaign launched by consumer and animal welfare advocates in February.

By teaming up with a bank, in this case Transportation Alliance Bank, EasyPay can avoid state interest rate laws, the groups noted.

Documentation sent to New Jersey 101.5 shows a 2019 financing receipt from a pet shop in Union, which was instructing the consumer to pay back more than $7,500 over 2 years for a $2,500 loan.

"The practice of rent-a-bank is happening here in New Jersey and we're deeply concerned about it," said Beverly Brown Ruggia, financial justice program director for New Jersey Citizen Action.

The campaign is urging TAB to stop helping EasyPay "exploit our most vulnerable state residents and the animals being used to lure those residents into debt traps." The groups are also calling on the FDIC, which supervises financial institutions, to stop TAB from "facilitating this avoidance of New Jersey law."

Lenders like EasyPay offer financing at spots such as pet stores, auto repair shops, and furniture stores. EasyPay processes loans through TAB in 32 states where its interest rates are illegal, and directly to consumers in states that allow high rates, according to advocacy groups.

"Only a few rogue banks are willing to front for predatory lenders," the National Consumer Law Center stated in a press release.

When reached for comment, a company representing TAB referred New Jersey 101.5 to a blog post about TAB's services. In it, the bank noted that traditional loans may not be an option for a number of U.S. citizens.

"An unsecured and short-term loan could serve as a vital lifeline for a family or an individual in crisis," the post reads. "For these reasons, TAB Bank provides these individuals with a significantly better alternative than a payday loan, as a means of providing them with a viable bridge to a better financial future."

EasyPay could not be reached for comment.

Brown Ruggia added that potential buyers can also play a part in limiting certain lenders' practices.

"I think the important message here is that consumers really need to take a moment, step away from the register and make sure they understand the terms that they're signing up for, for any kind of finances," she said.

Dino Flammia is a reporter for New Jersey 101.5. You can reach him at dino.flammia@townsquaremedia.com

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